Correlation Between DMY Squared and Gladstone Capital
Can any of the company-specific risk be diversified away by investing in both DMY Squared and Gladstone Capital at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining DMY Squared and Gladstone Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between dMY Squared Technology and Gladstone Capital, you can compare the effects of market volatilities on DMY Squared and Gladstone Capital and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in DMY Squared with a short position of Gladstone Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of DMY Squared and Gladstone Capital.
Diversification Opportunities for DMY Squared and Gladstone Capital
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DMY and Gladstone is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding dMY Squared Technology and Gladstone Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Capital and DMY Squared is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on dMY Squared Technology are associated (or correlated) with Gladstone Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Capital has no effect on the direction of DMY Squared i.e., DMY Squared and Gladstone Capital go up and down completely randomly.
Pair Corralation between DMY Squared and Gladstone Capital
Given the investment horizon of 90 days DMY Squared is expected to generate 7.77 times less return on investment than Gladstone Capital. But when comparing it to its historical volatility, dMY Squared Technology is 3.23 times less risky than Gladstone Capital. It trades about 0.04 of its potential returns per unit of risk. Gladstone Capital is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,634 in Gladstone Capital on August 27, 2024 and sell it today you would earn a total of 1,037 from holding Gladstone Capital or generate 63.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
dMY Squared Technology vs. Gladstone Capital
Performance |
| Timeline |
| dMY Squared Technology |
| Gladstone Capital |
DMY Squared and Gladstone Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DMY Squared and Gladstone Capital
The main advantage of trading using opposite DMY Squared and Gladstone Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DMY Squared position performs unexpectedly, Gladstone Capital can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Gladstone Capital will offset losses from the drop in Gladstone Capital's long position.The idea behind dMY Squared Technology and Gladstone Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Gladstone Capital vs. Main Street Capital | Gladstone Capital vs. PennantPark Floating Rate | Gladstone Capital vs. Horizon Technology Finance | Gladstone Capital vs. Prospect Capital |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
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| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |